Fourth Quarter and Full Year 2020 Highlights:
All amounts are in US dollars unless otherwise noted.
Pretium Resources Inc. (TSX:PVG) (NYSE:PVG) announces fourth quarter and full year 2020 production results and a $160 million discretionary payment against its credit facility. Pretivm also provides production and financial guidance for 2021.
The Company produced 347,743 ounces of gold in 2020, slightly above the midpoint of its guidance range of 325,000 ounces to 365,000 ounces. For 2021, the Company expects gold production to be in the range of 325,000 to 365,000 ounces, with a midpoint of 345,000 ounces.
“For the first time in the Company’s history we have achieved our annual production guidance, demonstrating the hard-work and perseverance of our team in light of the exceptional challenges we faced this year. We would like to thank all of our employees and contractors and the local communities for their continued support over the course of 2020. At Pretivm, no year is considered a success unless it is accomplished safely, and in the third quarter we were given a tragic reminder of the importance of keeping safety at the forefront of everything we do,” said Jacques Perron, President and Chief Executive Officer of Pretivm.
“Our gold production along with the value captured from the sale of the Snowfield Property has allowed us to significantly reduce our long-term debt and maintain a robust cash balance. We are now in a position to focus on further improving the safety, predictability and stability of production, while also prioritizing resource expansion and investing in the future of Brucejack.”
2020 Annual and Fourth Quarter Production
In 2020, 347,743 ounces of gold were produced at the Brucejack Mine at an average grade of 8.5 grams per tonne and an average gold recovery of 97%. In the fourth quarter of 2020, Brucejack produced 88,299 ounces of gold at an average grade of 8.9 grams per tonne and average gold recovery of 97%. The Company successfully ramped-up to an average processing rate of 3,800 tonnes per day in the month of December.
Prior to the end of 2020, a discretionary debt payment of $160.0 million was applied to the revolving portion of the Company’s credit facility, reducing the outstanding amount of the revolving portion to $38.0 million as of year end. In total, the company repaid $226.7 million of its credit facility in 2020. Even with the discretionary debt payment, the year-end cash and cash equivalents was $174.8 million, as compared to $175.0 million at September 30, 2020.
|Gold Production||325,000 – 365,000 oz|
|Average Grade||7.5 – 8.5 g/t|
|Recovery Rate||~ 97%|
|Cash Cost||$820 – 920 / oz sold|
|Sustaining Capital||$50 – $55 million|
|All-in Sustaining Cost||$1,060 – $1,190 / oz sold|
|Expansion Capital||$55 – $65 million|
|Free Cash Flow1||$120 – $170 million|
|Abbreviations: g/t (grams per tonne) and oz (ounces).|
|1 Based on a gold price of $1,700 per ounce of gold|
2021 Production Guidance
Gold production at the Brucejack Mine for 2021 is expected to be in the range of 325,000 to 365,000 ounces. The processing rate is expected to average 3,800 tonnes per day with average annual gold grade ranging between 7.5 grams per tonne to 8.5 grams per tonne at a targeted gold recovery of 97%.
2021 Financial Guidance
All-in sustaining cost1 for 2021 is expected to range from $1,060 to $1,190 per ounce of gold sold with cash costs1 expected to range from $820 to $920 per ounce of gold sold. The cash cost and AISC estimates in 2021 as compared to the actual costs for the nine months ending September 30, 2020 reflect the investments in the accelerated rate of underground development, comprehensive drill programs and improvement‐oriented capital expenditures.
Continuing to advance underground development at an accelerated rate of 1,000 meters per month and potentially increasing to 1,100 meters per month through 2021 will expand access underground. The expanded access will provide more flexibility to build drilled-off stope inventory, allow mining operations to optimize production and provide additional platforms for resource expansion drilling.
The 2021 Brucejack definition, sustaining and resource expansion drill programs are anticipated to total approximately 195,000 meters of diamond drilling at a cost of approximately $23 million, comprised of in-resource definition drilling (40%), in-resource and sustaining drilling (20%) and resource expansion drilling (40%). An extensive in-fill definition drill program is planned to increase the volume of grade information and geological understanding to enhance mine planning. Resource expansion drilling will target adjacent and near-mine zones with the potential to extend mineralization underground towards the West Zone, Galena Hill Zone, Gossan Hill Zone, and Bridge Zone, all less than one kilometer from current underground development. Initially, six drills are planned to be deployed underground, with an additional two surface drills to be added during the summer.
Sustaining capital expenditures, a component of AISC, are forecasted to be between approximately $50 million to $55 million, and include the capitalised portion of underground development and drill programs as well as improvement-oriented expenses, such as electric underground haul trucks to reduce costs related to ventilation and maintenance and increase productivity.
AISC and cash cost estimates also include costs associated with enhanced COVID-19 protocols continuing throughout 2021, which are estimated to be approximately $5 million.
Corporate administrative costs, a component of AISC, are forecasted to be between approximately $18 to $22 million, including share-based compensation.
2021 Free Cash Flow Forecast
Free cash flow1 for 2021 is expected in the range of $120 million to $170 million at a gold price of $1,700 per ounce. The 2021 free cash flow forecast includes expansion-oriented capital expenditures which total approximately $55 million to $65 million. Expansion capital expenditures include expansion of permanent Brucejack camps and projects to support growth and to improve the efficiency of operations. The free cash flow forecast also includes expenditures related to 2021 near-mine exploration program. The near-mine exploration program will focus on the new discovery at Hanging Glacier (see news release dated December 16, 2020), which is just four kilometers north of the Brucejack Mine and is easily accessible using existing exploration trails.
Management believes that 2021 guidance is achievable assuming there is no new significant impact on operations at the Brucejack Mine, including due to the novel coronavirus (“COVID-19”) pandemic. We have taken precautions to mitigate the risk of COVID-19. However, the COVID-19 pandemic and any future emergence and spread of similar pathogens could have a material adverse impact on Pretivm’s business, operations and operating results, financial condition, liquidity and market for our securities.
Impact of COVID-19
The Company’s primary commitment is the safety and health of its workforce and neighbouring communities in northwest British Columbia. Throughout the COVID-19 pandemic, the Brucejack Mine has operated continuously under the guidance and directives provided by Ministry of Energy, Mines and Low Carbon Innovation Guidance to Mining and Smelting Operations during COVID-19; BC Ministry of Health, BC Centre for Disease Control: Protecting Industrial Camp Workers, Contractors, and Employers Working in the Agricultural, Forestry, and Natural Resource Sectors During the COVID-19 Pandemic (July 28, 2020); and all applicable orders issued by the Provincial Health Officer. The Company has developed management plans to mitigate the spread of COVID-19 and protect the well-being of its employees, communities and other stakeholders.
Patrick Godin, P.Eng., Vice President and Chief Operating Officer, Pretium Resources Inc. is a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects, and has reviewed and approved the scientific and technical information contained in this news release.
Pretivm is an intermediate gold producer and owns 100% of the high-grade underground Brucejack Mine in northern British Columbia, Canada.
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